Participants at the January IOD training included senior officers from some of the largest local and multinational companies in Thailand.

In late January, more than 30 senior officers from 17 major Thai and multinational corporations attended an intensive anti-corruption training program led by the Thai Institute of Directors (IOD). This pilot two-day training course is the latest groundbreaking step in the Collective Action against Corruption campaign, now in its third year, being led by CIPE and IOD.

With technical and financial assistance from CIPE, IOD has assembled a still-expanding coalition of companies and business associations committed to fighting corruption in Thailand. To join this coalition, a company signs IOD’s Collective Action against Corruption Declaration which lays out tangible and specific steps that a company must take to proactively reduce corruption-related risks on the part of its employees, managers, and vendors. But signing this document is no mere photo-op, because to remain a member of this coalition, a company must submit to an external evaluation to verify whether or not it is actually doing what it has promised to do.

When the Thai military overthrew an elected government in 2006, and when the Supreme Court disbanded another elected government in 2008, corruption was the principal stated justification. Public perceptions and allegations of corruption can undermine government in Thailand to such an extent that democratically elected governments often lack public legitimacy in the eyes of competing (and color coordinated) segments of Thai society, who came out in droves to protest in red or yellow shirts depending on their political affiliation.

So the resounding victory of Yingluck Shinawatra in Thailand’s 2011 parliamentary elections – which marked just the second time since 1932 that a single party gained control of parliament – should not be perceived as a triumph of democracy in the country. Indeed, the only other time that a single party controlled parliament was in 2005 when Yingluck’s brother Thaksin Shinawatra won by an even larger electoral margin. Less than one year later, he was deposed in a military coup. Clearly, the situation in Thailand demonstrates that the consolidation of democratic principles and practices in a country requires more than just the ability to vote, and corruption is among the paramount obstacles to be overcome.

With the long-term goal of reducing corruption and promoting transparency in the Thai marketplace, CIPE launched a project in July 2010 with the Thai Institute of Directors (IOD) to cultivate private sector support for national anti-corruption initiatives. Since then, CIPE and IOD have designed a collective action strategy for reducing corruption in Thailand, assembled a still-expanding coalition of companies and business associations committed to that strategy, and developed a series of training programs and certification processes that ensure that coalition companies are actually doing what they pledge to do on anti-corruption.

President of Burma U Thein Sein at the US-ASEAN Forum (Photo: The Nation)

In his speech at the July US-ASEAN Business Forum in Siem Reap, Cambodia, U Thein Sein explained that Burma “has embarked on a democratic path” and is “moving toward a new democratic era.” He went on to outline the reform efforts his country is presently undertaking, efforts that give reason for optimism following April’s dramatic electoral victories for Aung San Suu Kyi and the National League for Democracy.

In addition to promises of regular and free elections, increased media freedom, and constructive engagement with leaders of ethnic minorities, President Thein Sein announced plans “to transform [Burma’s] centralized economy into a market-oriented economy.” At this same event, US Secretary of State Hillary Clinton said that President Thein Sein is a leader “who has moved his country such a long distance in such a short period of time.”

Moving forward, a successful and sustainable transition in Burma requires that economic growth be widespread and that economic opportunities arise for more than the well-connected few. However, numerous key institutions that are necessary for the realization of this goal are either weak or completely missing in Burma today.

Paramount among these institutions are private property rights and the rule of law. If these institutions, which are fundamental for the development of a market economy, are not substantively reformed and strengthened in Burma, its economic and democratic transition will prove unsustainable.

On Friday March 30, more than 200 local and central government officials, NGOs, academics and donor representatives met in Manila for the Public Governance Forum of the Institute for Solidarity in Asia (ISA). This CIPE-sponsored event highlighted the remarkable accomplishments in public governance made by cities and central government agencies that are working with ISA.

There are now more than 40 cities across the Philippines, along with several provinces and thirteen central government agencies, that have adopted ISA’s Performance Governance System (PGS). CIPE has worked with ISA since 2004 to develop and promote the PGS as a public governance reform tool in the Philippines.

When a city adopts the PGS – an adaptation of a management evaluation tool developed at Harvard Business School – city officials work with a broad-based community consultative group to design specific public policy goals, an action plan to accomplish them, and performance metrics by which to measure progress. And the results are remarkable.

IOD and Thai Banks Join Hands in the Fight Against Corruption (Photo: The Post Today).

On March 27, nine commercial banks jointly signed the Anti-Corruption Declaration of the Thai Institute of Directors (IOD). This Declaration lays out tangible and specific steps that a company must take to combat corruption on the part of its employees, managers and vendors, and is the unifying document of IOD’s Collective Action Against Corruption campaign.

With CIPE support and technical assistance, IOD has built a private sector coalition of Thailand’s largest businesses and most influential business associations united in their commitment to tackle the supply side of corruption. These nine banks are the latest to join this coalition, and they now take rank with Thai and multinational firms such as PTT, Thai Airways, Siam Cement, the Shin Corporation, Toshiba Thailand, Pfizer Thailand, and Siemens Thailand.

One of the business associations in IOD’s anti-corruption coalition is the Thai Bankers’ Association (TBA), and all nine of the banks that joined on Tuesday are TBA members. There are now 15 Thai banks in IOD’s coalition, representing the full membership of the TBA.

Speaking of the significance of this event, IOD President and CEO Bandid Nijathaworn said “this is a major step [in the fight against corruption] in that this is the first time that all of an association’s member companies are part of the coalition.” The Chairwoman of IOD, Khunying Jada Wattanasiritham, echoed these sentiments by explaining that this campaign is the paramount collective action initiative in Thailand today.

This event attracted considerable media attention, with the Nation – one of the country’s biggest English-language dailies – penning an article lauding the banks for their effort “to prevent and suppress graft.” But this was not a mere photo-op. To join IOD’s anti-corruption coalition, companies must make concrete promises, and concrete steps must be taken to fulfill these promises.

When a company or business association signs IOD’s Anti-Corruption Declaration, they pledge to implement strong anti-bribery policies and anti-corruption controls in their organization. They also pledge to send senior executives and compliance staff to IOD-led anti-corruption training programs. Perhaps most significantly, coalition members must submit to an external verification to certify whether or not they’re actually doing what they promise to do. If they aren’t, they will be removed from the coalition.

This private sector coalition, the members of which all voluntarily stepped forward to take part, is having a tremendous impact onThailand’s fight against corruption. Because corruption distorts markets, denies citizens and businesses the benefits of free competition, and retards economic development, reducing corruption is among Thailand’s paramount development goals.

Moreover, in a country in which rampant corruption has directly and repeatedly contributed to the destabilization of the political process, this anti-corruption initiative of the Thai Institute of Directors is making invaluable contributions to Thailand’s democratic development as well.

Twenty-seven Thai CEOs at the November 2010 signing of the Collective Action Coalition pledge to fight corruption in Thailand, on the eve of the 14th International Anti-Corruption Conference. (Photo: CIPE)

When the military overthrew a democratically elected Thai government in 2006 and when the Supreme Court disbanded a democratically elected government in 2008 – corruption was the principal justification. Corruption has become a part of daily life here – allegations of corruption contribute to the competing claims of Thailand’s color-coded protest groups that successive governments have lacked legitimacy. Uncertainty in the political environment is beginning to affect business; and uncertainty within the business community affects everyone. Businesses have started to come together to fight back.

During the Cold War, countries throughout the developing world, especially in newly-independent South Asia and Sub-Saharan Africa, implemented socialist and statist economic models. However, as the public institutions in these fledgling nations were ill-equipped to administer state-centric economic structures, the adoption of such governance systems had, in the overwhelming majority of cases, devastating results.

In addition to setting back national economies by several decades, the rapid expansion of central government power and responsibility brought about the public sector pathologies still felt today, such as corruption, mismanagement and inadequate services. In recent decades, the vast majority of these countries have attempted to reform their economies to rely more on private sector enterprise and capital.

More recently, in an attempt to improve efficiency and service quality, many of these governments initiated decentralization programs wherein the burden of service delivery is shifted to sub-national levels of government. To be effective, decentralization requires increased capability and administrative capacity on the part of local governments. Within the international development community, therefore, there is a growing emphasis on public sector reform and capacity-building, especially at sub-sovereign levels of government.

About

The CIPE Development Blog provides coverage of the Center for International Private Enterprise and its partner network at work -- highlighting successes, drawing out lessons from failure, and exploring the broader issues of political and economic development. For more information visit CIPE.org.